Correlation Between Alpha Star and Berenson Acquisition

Can any of the company-specific risk be diversified away by investing in both Alpha Star and Berenson Acquisition at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alpha Star and Berenson Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpha Star Acquisition and Berenson Acquisition Corp, you can compare the effects of market volatilities on Alpha Star and Berenson Acquisition and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alpha Star with a short position of Berenson Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Star and Berenson Acquisition.

Diversification Opportunities for Alpha Star and Berenson Acquisition

-0.11

Correlation Coefficient

Alpha Star  Berenson Acquisition

Good diversification

The 3 months correlation between Alpha and Berenson is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Star Acquisition and Berenson Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berenson Acquisition Corp and Alpha Star is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alpha Star Acquisition are associated (or correlated) with Berenson Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berenson Acquisition Corp has no effect on the direction of Alpha Star i.e., Alpha Star and Berenson Acquisition go up and down completely randomly.

Pair Corralation between Alpha Star and Berenson Acquisition

Given the investment horizon of 90 days Alpha Star Acquisition is expected to generate 2.87 times more return on investment than Berenson Acquisition. However, Alpha Star is 2.87 times more volatile than Berenson Acquisition Corp. It trades about 0.04 of its potential returns per unit of risk. Berenson Acquisition Corp is currently generating about 0.03 per unit of risk. If you would invest  1,027  in Alpha Star Acquisition on September 13, 2024 and sell it today you would earn a total of  193.00  from holding Alpha Star Acquisition or generate 18.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.23%
Values	Daily Returns

Alpha Star Acquisition  vs.  Berenson Acquisition Corp

Alpha Star Acquisition

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Star Acquisition are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Alpha Star is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Berenson Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days Berenson Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak fundamental indicators, Berenson Acquisition may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Alpha Star and Berenson Acquisition

The main advantage of trading using opposite Alpha Star and Berenson Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Star position performs unexpectedly, Berenson Acquisition can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Berenson Acquisition will offset losses from the drop in Berenson Acquisition's long position.

The idea behind Alpha Star Acquisition and Berenson Acquisition Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.